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DiBiase v. SmithKline Beecham Corp.

filed: February 16, 1995.


On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. No. 93-cv-3171.

Before: Becker, Greenberg, and McKEE, Circuit Judges.

Author: Greenberg


GREENBERG, Circuit Judge.

This is an appeal from a district court's judgment predicated on its opinion holding that an employer violates the Age Discrimination in Employment Act ("ADEA") by offering to all employees terminated as a result of a reduction-in-force (RIF) enhanced severance benefits in return for a general release of all claims, including ADEA claims, against the employer. We conclude that such a practice does not violate the ADEA, and therefore we will reverse the judgment of the district court. Because there is no basis for further proceedings in this case, we will remand the matter to the district court with instructions to enter judgment for the defendant.


The germane facts are not disputed.*fn1 In 1990, the employer, defendant SmithKline Beecham Corporation (SmithKline), a Philadelphia-based pharmaceutical company, consolidated four computer data centers it operated throughout Pennsylvania and in Tennessee into a single center at King of Prussia, Pennsylvania. Prior to the consolidation, SmithKline employed plaintiff John DiBiase as a first-shift supervisor of computer operators at its Philadelphia data center. With the consolidation, he moved to King of Prussia, where six supervisors remained employed, working two per shift, with each pair overseeing three to five computer operators. Between late 1991 and early 1992, SmithKline decided to reduce the staff of this division, and it assessed the concomitant consequences. Specifically, the data center's personnel manager "prepared an 'adverse impact analysis' examining the gender, race, and age of the shift supervisors to determine if any adverse impact would result from the planned reduction in staff." DiBiase, 847 F. Supp. 341, 343. On February 1, 1992, SmithKline decided to lay off DiBiase and one other shift supervisor and it informed DiBiase of this decision the next day. At that time, he was 51 years old.

SmithKline offered employees terminated in a RIF a separation benefit plan, which provided a lump sum payment based on the employee's length of service, as well as continued health and dental benefits. Specifically, the basic plan provided 12 months salary and three months continued benefits. Additionally, the plan offered enhanced benefits to employees willing to sign a general release of all claims against SmithKline. Terminated employees who signed the release were entitled to receive 15 months salary and six months continued health and dental coverage. The release is in large part the subject of this appeal, and it stated in pertinent part:

In consideration of the monies and other consideration to be received by me under the SmithKline Beecham Separation Program, I hereby irrevocably and unconditionally release, waive and forever discharge SmithKline Beecham Corporation, its affiliates, parents, successors, predecessors, subsidiaries, assigns, directors, officers, employees, representatives, agents, and attorneys . . . from any and all claims, agreements, causes of action, demands, or liabilities of any nature whatsoever . . . arising, occurring or existing at any time prior to the signing of this General Release, whether known or unknown.

General release § 1 at app. 98. The release provided that employees who sign it waive

any and all claims arising under federal, state, or local constitutions, laws, rules or regulations or common law prohibiting employment discrimination based upon age, race, color, sex, religion, handicap or disability, national origin or any other protected category or characteristic, including but not limited to any and all claims arising under the Age Discrimination in Employment Act of 1967, as amended, the Civil Rights Act of 1964, the Civil Rights Acts of 1866 or 1871, the National Labor Relations Act and/or under any other federal, state or local human rights, civil rights, or employment discrimination statute, rule or regulation.

Release § 1 P2 at app. 98. Prefatory language to the release cautioned employees that "YOU SHOULD THOROUGHLY REVIEW AND UNDERSTAND THE TERMS, CONDITIONS AND EFFECT OF THE SEPARATION PROGRAM AND OF THIS GENERAL RELEASE. THEREFORE, PLEASE CONSIDER IT FOR AT LEAST TWENTY-ONE (21) DAYS BEFORE SIGNING IT. YOU ARE ADVISED TO CONSULT WITH AN ATTORNEY BEFORE YOU SIGN THIS GENERAL RELEASE." Release at app. 98. Under the terms of the release, employees were given seven calendar days after signing to revoke their signature. Release at app. 99.

DiBiase declined to sign the release. Instead, on April 29, 1992, he wrote a letter to William Mossett, SmithKline's personnel director, contending that SmithKline's policy violated the ADEA. The letter reads in pertinent part:

So there can be no possible misunderstanding I am stating my position as follows.

As stated in my grievance I have reason to believe that the company violated federal and state age discrimination laws in terminating me. I am declining the enhanced separation benefit package because I do not wish to give up my rights under these discrimination laws. I believe that the company's policy of requiring persons over forty to release age discrimination claims against the company in order to secure enhanced separation benefits violates these age discrimination laws since persons under forty may elect to receive enhanced separation benefits determined by the same formula that applies to persons over forty without releasing potential age discrimination claims.

Letter from DiBiase to Mossett of April 29, 1992, at app. 106, 107. Because DiBiase did not sign the release, SmithKline refused to give him the enhanced benefits. See Letter from Tyrone Barber, SmithKline's Personnel Manager, to DiBiase of May 4, 1992, at app. 108. Still, DiBiase received the benefits due him under SmithKline's basic plan. Id.

On July 2, 1992, DiBiase filed an affidavit and charge with the Equal Employment Opportunity Commission (EEOC) alleging both that SmithKline terminated his employment because of his age, and that SmithKline's separation plan violated the ADEA because it treated older workers differently than younger workers by requiring them to release ADEA claims. DiBiase EEOC aff. at app. 109-110. On March 31, 1993, the EEOC determined that "there is not reasonable cause to believe that there has been a violation of the statute under which the charge has been filed." EEOC Determination at app. 67-68.

On June 14, 1993, DiBiase filed a complaint against SmithKline in the United States District Court for the Eastern District of Pennsylvania. His amended complaint contained two counts. Count 1 asserted that SmithKline fired him because of his age, in violation of the ADEA. Complaint P 15-19 at app. 55-56. Count 2 alleged that SmithKline's "separation benefit plan violates ADEA because it discriminates against [him] and its other employees forty or older by having higher requirements for them to qualify for the additional separation benefits than apply to its employees under forty." Complaint P 29 at app. 58. DiBiase also asserted that SmithKline's actions underlying both counts were willful and that he was entitled to punitive and double damages. Complaint PP 19, 31 at app. 56, 59. On August 2, 1993, SmithKline moved to dismiss count 2 of the amended complaint, pursuant to Fed. R. Civ. P. 12(b)(6). In a Memorandum opinion and order filed on September 29, 1993, the district court denied the motion. The district court suggested that DiBiase might be able to show that even if SmithKline's plan was a "facially neutral employment" policy, it "had a significantly discriminatory impact." Memorandum Op. at app. 47.

On December 20, 1993, SmithKline moved for summary judgment on both counts of DiBiase's complaint. In an opinion and order dated March 15, 1994 -- entered the next day and reported at 847 F. Supp. 341 (E.D. Pa. 1994) -- the district court granted the motion as to Count 1 and denied it as to Count 2. Specifically, the district court found that "no jury reasonably could conclude from the facts" that DiBiase had been replaced in his job. 847 F. Supp. at 346. Inasmuch as DiBiase had not been replaced, the court concluded that he had failed to establish a prima facie case of wrongful termination under the ADEA. Thus, the district court granted summary judgment to SmithKline on the termination count, count 1.*fn2

However, the district court denied SmithKline's motion for summary judgment on count 2. Specifically, the court found that the separation plan involved discriminatory treatment of older persons. Relying on the ADEA section providing a cause of action only for persons at least 40 years old, see 29 U.S.C. § 631(a), the district court observed that "in order for an older employee to receive the same enhanced benefit as a younger employee, the older employee must release her right to file an ADEA claim." DiBiase, 847 F. Supp. at 347. The court further observed that "this treatment is patently different because the younger employee cannot have an ADEA claim." Id. From these observations, the district court concluded that "SmithKline's policy facially discriminates" against employees protected by the ADEA. Id. at 348. Thus, the court denied SmithKline's motion.

On April 26, 1994, DiBiase made a cross-motion for summary judgment on count 2 of the amended complaint, based entirely on the district court's reasoning in its March 15, 1994 opinion.*fn3 On May 3, 1994, the district court granted this motion, "for the reasons fully set forth in my March 15, 1994 Opinion." May 3, 1994 Order at n.1. Because the parties had stipulated to damages ...

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